The Benefits of Franchising
When you sell a franchise the franchisee, by paying you a franchise fee, is buying your business model, your brand equity and your operational model. In addition to the sale of the franchise you will earn income from royalties, service fees and product and equipment sales.
In order to make the business work, your franchisees assume financial responsibility: real estate costs, equipment, furniture, inventory, supplies, employee wages, payroll taxes and working capital. You can grow the number of locations while minimizing your own capital investment.
Greater Market Share.
With multiple franchise locations, you can increase market share much more quickly and inexpensively than through establishing company-owned stores.
Economies of Scale.
The purchase of equipment, supplies and insurance is much more cost-effective under the franchise model. In terms of advertising, particularly within a single market, your cost is virtually the same to advertise for 10 stores, as it is to do so for one.
Minimized Growth Risk.
Franchising can generate high financial returns for relatively little risk. When you franchise you put relatively little money into adding another location.
Access to Better Talent.
Franchising allows you to find talented, hard-working people to build the business. These individuals, who have a financial stake in the success of the business, often prefer profiting by investing their own time and energy rather than being an employee on salary.